CEOs usually see a CEO role as the final rung on a
career ladder. Yet for David Moffatt, formerly CEO of GE - Australia
and New Zealand, and prior to that CEO GE Capital - Australia and New
Zealand, his previous CEO roles were indispensable stepping stones to
his current role as Chief Financial Officer at Telstra. Here Moffatt reflects
on his experiences in both the CFO and CEO roles, and the different qualities
of leadership these key roles require.

ceoforum.com.au: What initially
attracted you about the role at Telstra?

Moffatt: The initial attraction was that, for
my family and myself, the centre of the world was and is Australia. Telstra's
success really matters for the future of Australia. So you not only had
the excitement of an industry that is changing rapidly, but you also had
the attraction of helping make a contribution to the productivity of the
nation. That made the role a terrific opportunity.

ceoforum.com.au: How did you feel about the prospect
of a move from the CEO to the CFO role? Were there any pride or ego issues,
in moving into a non-CEO role?

"The skills
are common, but the weightings differ."

Moffatt: Not really. Having been both a CFO
and a CEO, I think the two roles have a lot of common elements: they are
all about people, processes and money, in a word execution. However, there
is probably a difference in emphasis. The CEO is more the driver, the
challenger, and the visionary, while the CFO role is more the enabler,
the problem-solver, and the analyser. Of course, CEOs need analytical
skills and CFOs need vision, but the weighting of those elements is different
in each role.

ceoforum.com.au: What about the shift from being
a country manager in a global multinational like GE into such a highly
visible, listed corporation like Telstra? Are the skill sets much different?

Moffatt: I think the application of your skill
sets is similar. In the country manager role, your primary responsibilities
are growth and business development. In that sense, it's a true CEO role,
it's about building your business, but what you don't need to do a lot
of as a country manager is communicating with investors.

In a large, domestically oriented, listed company like
Telstra, all those business building skills are directly applicable, but
you have the added responsibility of both communicating with the market
and, particularly as the CFO, being responsible for the quality and transparency
of financial reporting. I guess you feel the 'buck stops here' more than
would be the case as a country manager in a large MNC. But I do think
the skill sets are very similar.

ceoforum.com.au: Given that the two roles do need
similar skills, what are some of the things that are specific to either
the CFO or CEO role?

Moffatt: This is something I have thought about
a lot. I'd see the CEO as growth driver, cultural leader, customer champion,
focussed on people and values, and very much the public face of the organisation.
The CFO role is about execution, strategy support, growth enabling, productivity
and process transformation, as well as compliance and risk management.
Again I'd emphasise that many skills are common, but the weightings are
different.

ceoforum.com.au: Is getting more involved in the
process side of the business something you have enjoyed? Being concerned
more with the 'how' side of the business?

Moffatt: It is a very exciting part of the role,
as the industry, Telstra and our customers are all undergoing rapid change.
It's great working with all our staff on process improvement and productivity
initiatives, and in turn being able to drive shareholder value, so that
aspect of the role has been very rewarding.

ceoforum.com.au: What were the most valuable things
you learnt at GE that you have been able to bring to this role?

Moffatt: I think everything you do adds to your
experience, not just your most recent position. I've been very fortunate
to work for a range of organisations in a diversity of businesses, each
of which contributed to my overall business perspectives.

I think the day-to-day issues you face in any business
are very similar. Can you place the right people in the right jobs, with
the right skill sets and values? Can you successfully address the customer
issues of any particular marketplace? Do you have a set of processes that
can capitalise on market opportunities, and consistently deliver to customers?
And can you allocate capital effectively across your businesses? GE in
particular have brought together these questions into an integrated business
system that works very, very effectively to drive growth, develop people
and create shareholder value. In that sense, my time at GE was both a
culmination and systematisation of a lot of earlier experience.

ceoforum.com.au: Do you spend
less time on people issues now, when compared to your previous role?

Moffatt: Not much difference, really. In this
role, there is also an enormous people challenge, as I am directly responsible
for around 4,000 people, across the finance functions, risk functions,
process improvement, shared services, M&A and IT. All of those people
require leadership, so effectively you still need strong people leadership
skills.

One difference between the two roles is that, in the
CEO role, you spend more time thinking strategically about moving people
across a broader organisational landscape than you would in the CFO role.
But the people you are managing tend to want the same things. They want
to know where the organisation is going, what their personal opportunity
is, and how you can help them to develop personally and professionally.
So you still need to provide that leadership.

I think the leadership challenge around people is different
depending on the type of business you are in. In an organisation that
is growing rapidly, a lot of the people issues almost resolve themselves,
due to the inherent excitement of growth in the organisation. In an established
organisation where the emphasis is on getting more productive, the issue
is more difficult. You have to spend a lot more time working with people,
being transparent, on getting more done with less, and linking back all
the time to customer imperatives.

ceoforum.com.au: Did GE's famed portfolio approach
to its businesses help you in your leadership role at Telstra?

Moffatt: It's a very different business model.
Telstra is an integrated telecommunications company, so every element
of it is linked to every other element. We have one brand, one leadership
team, one set of values. You can't apply the pure portfolio-based approach
to this type of business.

"In integrated
businesses, capital allocation is much more complex."

The integrated business model has all kinds of implications.
Take the capital allocation process, for example. In a traditional portfolio-based
business, that process is relatively simple. You simply say, here is my
leverage, here is my required return on equity, show me how I can get
that over time. In an integrated business, capital allocation is far more
complex, with a lot more variables, such as reinvestment levels and future
growth, understanding commercial risk, factoring in technological change,
and tracking interrelationships between different elements in the overall
business.

Let me make a key point here. Leadership is an institutional
capacity, it's not about the effectiveness, capabilities or skill sets
of any one individual. The success of the organisation depends on how
collectively individual skill sets come together, to bring out the best
qualities of the organisation. That is particularly true in an integrated
organisation like Telstra. All the different elements of the business
model, from the network through to customer service, have to come together
and work well for the organisation to succeed. With a portfolio approach,
you can tolerate more variation.

ceoforum.com.au: Was it hard
to enter a new industry, especially one as technologically complex as
telecommunications, and feel the same confidence you could be effective
as a leader?

Moffatt: I think the quality of your leadership
comes down to the quality of the questions you ask. In all leadership
roles, you are assessing risks, returns and probabilities. You need the
analytical skills to understand industry structures - the regulatory environment,
the nature of competitors, the customer imperatives, and so on. You also
need to make sure you have the disciplined processes that can deliver
to customers while providing your shareholders with an adequate return
on capital.

In any leadership role, you do need to understand an
industry, and that can take some time, but the imperatives are the same.
It's about risks and returns, understanding the general industry drivers,
and also the particular barriers and opportunities that your company faces.

In fact, I would argue that diversity of perspective
and background is essential in any management team. This is really another
aspect of the point about leadership being an institutional capacity,
rather than the prerogative of a particular individual. If you can engage
people from a range of backgrounds and experience, and harness that diversity,
you can create real value. The challenge with diversity is to stay very
focussed on outcomes and manage the risk of getting lost in debates on
every issue.

ceoforum.com.au: It's interesting that you caution
about getting lost in debate, as that can be the downside of bringing
people together who don't share too many common assumptions - everything
can take longer!

"Capital,
markets and customers are all impatient."

Moffatt: There's an action imperative to everything
we do. Capital markets and customers are all impatient. Speed, and cycle
time are issues you have to have at the back of your mind in every big
decision you make. The more you can systematise the processes of analysing
business problems, the faster you can get to the data, and thus bring
the team to a collective decision. In today's environment, gut feel just
doesn't work. Business is complex. You may have good business instincts,
but you fundamentally need data to scope the opportunity or the problem.

ceoforum.com.au: Coming back
to the point about the quality of the questions a leader asks, is that
something that is fundamental to both the CEO and CFO roles?

Moffatt: Absolutely. And that requires sound
instincts that are in turn a product of your accumulated business experience.
You sense when the answer doesn't feel right, and/or you need to pursue
the issue with more questions until you get to the heart of the issue.
That's where diversity is so powerful. As you pick up on a particular
thread, others will bring different perspectives and questions to really
drive deeper into the problem. This will help you better understand and
analyse the problems and opportunities that you face.

ceoforum.com.au: You don't think some people might
be uncomfortable with that? They might say 'Hang on, you're the leader,
you should have the answers'?

Moffatt: There often is this expectation in
any organisation that the leader will have the answer. In reality, the
leader needs to have the self-confidence to say, 'I don't have the answer,
but, with our collective experience, we can explore this problem
and find the answer together'. And that answer will always be a balance
between the customer imperative, the shareholder imperative, and the staff
imperative. As the leader, you need to make the call on what that right
balance is. That is the fundamental responsibility of leadership, and
that is always the case.

ceoforum.com.au: Have you found any aspects of your
new role particularly demanding?

Moffatt: I actually found almost all elements
of my role had a greater complexity than I had encountered before, by
virtue of the operating nature of the role and the integrated, interrelated
nature of the organisation. Risk management, finance, shared services
and IT are good examples - they are not areas that you can jump to conclusions
about too quickly, you need to understand the interrelationships first.
At the same time, you are conscious that you don't actually have
a lot of time, so you need to draw in the people around you. You need
to trust the people around you in key leadership roles, ask them questions,
and form judgements about their abilities and skills when they answer.
It's basically the quality of the answers you get that tell you whether
you need to make leadership changes. I am very fortunate to have exceptional
people around me in the key leadership roles within my portfolio at Telstra,
so I can trust the people, create an environment that will support them,
while still challenging them to always do better.

ceoforum.com.au: What would your advice be to other
CEOs contemplating a CEO-CFO shift?

"Lone individuals
can't drive large companies."

Moffatt: If you are a CEO of a smaller
organisation contemplating a shift to be CFO of a larger one, I would
say it's a tremendous developmental step, and to go for it. While the
roles have some differences, there are far more commonalities between
them. After all, every large company needs an effective team to succeed
- the view that individuals can drive large organisations on their own
is, I think, flawed. Both roles have the fundamental responsibility to
create an environment within which teams can succeed.